Trend Truth: Customer Loyalty

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Why do 77% of shoppers report holding a customer rewards card, but only 40% hold a store-issued credit card?

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Trend Truth: Customer Loyalty

  1. 1. TrendTruth: Store Credit 77% of all shoppers hold a loyalty card –but just 40% use a store-issued credit card. Why the discrepancy? FGI investigates.
  2. 2. More businesses than ever offer rewards for loyalty.
  3. 3. <ul><li>Grocery (Food Lion MVP, Harris Teeter VIC…) </li></ul><ul><li>Big-box (Target, etc…) </li></ul><ul><li>Bookstores </li></ul><ul><li>Pharmacy </li></ul><ul><li>Airlines </li></ul><ul><li>Hotels </li></ul><ul><li>And more… </li></ul>
  4. 4. Who are the Leaders? <ul><li>88% of shoppers hold a loyalty card for grocery </li></ul><ul><li>59% hold one for pharmacy </li></ul><ul><li>31% hold a card for a bookstore </li></ul><ul><li>25% hold a card for office supply </li></ul><ul><li>For big-box retailers, department stores, restaurants, hotels, and airlines, the number is lower (15-18%) </li></ul>
  5. 5. “ At which stores do you hold a customer loyalty card? Check all that apply.”
  6. 6. How many loyalty cards? <ul><li>Most who report holding a loyalty card have more than one (92%) </li></ul><ul><li>A quarter hold two cards (22%) </li></ul><ul><li>One fifth carry three (20%) </li></ul><ul><li>A handful have more than 7 (17%) </li></ul>
  7. 7. Why get a loyalty card?
  8. 8. “ What are the advantages of signing up for a customer loyalty card?”
  9. 9. <ul><li>82% want discounts, rebates and savings </li></ul><ul><li>41% want to get bonus points </li></ul><ul><li>39% want personalized coupons </li></ul><ul><li>38% want access to special sales </li></ul><ul><li>Others want gas rewards, pharmacy rewards, discounts at partner companies </li></ul>
  10. 10. Fewer shoppers pursue store-issued credit.
  11. 11. <ul><li>40% of shoppers hold a store-issued credit card, fewer than those enrolled in non-credit loyalty programs </li></ul><ul><li>Discouraged primarily by expensive interest rates (46%), annual fees (32%), and financing percentages (31%) </li></ul><ul><li>Also worried about privacy and credit risks </li></ul>
  12. 12. What about the non-adopters?
  13. 13. <ul><li>Some do not shop often enough at any store offering rewards to justify signing up </li></ul><ul><ul><li>43% for traditional loyalty cards </li></ul></ul><ul><ul><li>33% for store-issued credit cards </li></ul></ul><ul><li>With loyalty cards, many worry about privacy </li></ul><ul><ul><li>40% don’t want information given to third parties </li></ul></ul><ul><ul><li>27% don’t want their purchasing habits tracked </li></ul></ul><ul><ul><li>23% simply don’t want to issue personal info </li></ul></ul>
  14. 14. Enough rewards? <ul><li>A third of shoppers think loyalty cards do not offer enough rewards to justify signing up </li></ul><ul><li>Nearly 1 in 5 think the same of store-issued credit cards </li></ul><ul><li>Again, many feel they are not “loyal” enough to any particular business to justify signing up </li></ul>
  15. 15. Actionable Insights <ul><li>Most shoppers are in some kind of loyalty or customer rewards program, but about 1 in 4 are non-adopters </li></ul><ul><li>More shoppers enrolled in traditional loyalty programs than credit programs </li></ul><ul><li>Non-users might adopt if they felt secure and believed the rewards were enough </li></ul><ul><li>Some shoppers do not shop often enough at any one store to adopt </li></ul>
  16. 16. Next Steps <ul><li>Use an awareness/usage study to assess whether and why your customers use the cards –and, if not, why not. </li></ul><ul><li>Survey your customers on their feelings about loyalty and credit cards to help you pinpoint what program would best serve your retention strategy. </li></ul><ul><li>Ongoing satisfaction tracking ensures that customers feel their cards offer  enough  rewards and promise enough perceived benefits to justify enrolling. </li></ul>
  17. 17. How do we know this?
  18. 18. Survey Methods <ul><li>Date of Survey: July 19-22, 2010 </li></ul><ul><li>Respondents: 400 </li></ul><ul><li>Sample Source: FGI SmartPanel </li></ul>This nationally-representative sample consists of adults aged 18 and up and is balanced to the US population using recent census data. One can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.
  19. 19. Why FGI <ul><li>Custom online panels </li></ul><ul><li>Branded online communities </li></ul><ul><li>SmartPanel: 100,000+ panelists </li></ul><ul><li>SmartPanel Community </li></ul><ul><li>Human experts who handle each step of the process with you and your customers in mind </li></ul>
  20. 20. FGI Research: custom panels, research experts, dynamic approach.
  21. 21. <ul><li>This TrendTruth is produced by FGI Research. Learn more about the market trends online at our TrendTruth blog… </li></ul><ul><li>… or follow us on Twitter! </li></ul><ul><li>@TrendTruth </li></ul><ul><li>fgiresearch.com/trendtruth </li></ul>

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